How to balance your books

balance-147053_960_720It is harder to get your books to balance than it sounds.  We see a lot of common errors that creep up and multiply over time.  Here are our top 3 tips of how to balance your books.

  1. Check each accounts statement for a month or all statements for a year and see how they compare to your accounting software.  You will want to start with the opening and closing balance.  If they match then you are good.  If they do not match then move to the total deposits and payments and see if they match.  Eventually you will be able to narrow in on the problem.
  2. Check how your accounts are interacting with each other.  A common mistake is to incorrectly do the transaction that pays your business credit card resulting in a double payment or charge.
  3. Take it step by step and match each transaction in your accounting software with your bank and credit card statements.  If everything matches then you will be on your way.  Sometimes Xero or other software shows a “statement balance” that does not necessarily match to your actual statement so you will want to look for un reconciled line items that your software may be considering in your balance.

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